Web Strait’s Finance

After dropping badly for several transaction days, KLCI had started to increase in last tuesday (i.e. 6th, March). Furthermore, KLCI had continued it’s rise on wednesday and the following transaction days of last week (i.e. from 7th to 9th of March). Anyway, such rising trend may not be able to last in this week.

From the graph shown above, we can see that was just a narrow increment on friday compared with those relatively much larger increments on tuesday(6-Mar-07), wednesday(7-Mar-07) and thursday(8-Mar-07). That means most of the investors had started to worry about the market’s adjustment that would happen anytime and took a wait-and-see stance for the time being. Hence, investors are advised to be more aware of this sentiment. All in all, there were most of the market analysts expect that profit taking corrections should arise in this week.

The nightmare seems still haven’t ended yet, most of the markets in Asia fell sharply on this Monday. Hong Kong - Hang Seng dropped 777.13 points (or 4.00%) to 18664.88, Japan - Nikkei 225 index fell 575.68 (or 3.34%) to 16642.25, U.S. - Dow Jones fell 120.24 (or 120.24) to 12114.10, Taiwan down 285.59 (or 3.74%) to 7344.56, and Singapore - STI fell 96.45 (or 3.13%). Besides, KLCI of Malaysia fell for sixth day to 1110.69, i.e. KLCI had dropped 53.99 (or 4.64%). By the way, KLCI was the market that had dropped worst in terms of percentages i.e. about 4.64%. The following chart shows KLCI’s performance for the latest transaction days.

As you can see from the graph above, KLCI had dropped 162.18 points within 5 transacton days. Analysts said global stocks fall reflect underling concern that the U.S. and Chinese economies will turn weaker. Besides, Japan’s yen expected to continue going high against the dollar in which may caused so called yen “carry trades” and hurt the liquidity of the market. Hence, investors are advised not to enter the stock markets now and should take a wait-and-see stance for the time being.

All in all, the market will need at least one month to see a stock rebound as the investors need time to regain their confidence against their markets.

Last week must be one of the most horrible weeks to those stocks investors around the world. All of the main indexes for China, Hong Kong, Japan, United States, Europe and Southeast Asia plunged into darkness. Most of the Asia markets continued to be weak on Friday’s close. A summary of Friday’s close in Asia is as follows:

• Nikkei - down 235.58 points, -1.35%
• Taiwan - down 7.90 points, -0.1%
• Shanghai - up 34.34 points, +1.23%
• Hang Seng - up 95.41 points, +0.49%
• STI - down 13.84 points, -0.45%
• KLCI - down 16.23 points, -1.37%

Within the 5 transaction days in last week, about RM101.37 billions of wealth from KLSE had gone at a glance. In overall, KLCI had droped 120.17 points in one week time! And KLSE ends the whole week’s transactions with KLCI closed at 1164.68 on friday. There following are several main reasons that had caused the KLCI dropped over last week:

• Investors worried about China’s economic boom in which would badly affect the global economy.
• There were concerns about actions likely to be taken by China to curb its hot economy & money inflows.
• Subsequently, the Stocks in China dropped drastically by 9%.
• This had caused the anxiety among the investors in the regional markets like Hong Kong, Japan and Southeast Asia. As a result, all of these markets dropped dracstically too.
• Such news had badly affected the stock markets of United States and Europes in which starts their transaction day after Asia. As a result, all of these markets dropped dracstically too.
• Other than the above reasons, KLCI had also been affected by some local sentiments. Some investors consider KLSE had reached “overheat” or “overbought” level. Such situation had been more obvious after KLSE unbelievably breaks several new records(i.e. highest transactions volume, KLCI reached the highest level in 13years & etc.) after Chinese New Year’s holiday(i.e. from 21st - 23rd, February).
• “T+3″ sentiments in which brought to speculations.